The Telecommunications Act provided for the FCC to assess fees from digital broadcasters who get paid for ancillary or supplementary services -- subscription channels, paging services, pay-per-view and the like.(8) It does not prohibit broadcasters from using multiple signals -- multicasting several over-the-air channels that get revenue from commercials. There is good reason to let the marketplace settle whether a single high-definition broadcast signal, multiple standard definition channels, datacasting, or various combinations of them, will work best. Innovation and testing the markets in this area should not be unreasonably stifled, particularly since multichannel broadcasting could provide long sought new competition to cable and other multichannel program distributors.
Additionally, it is conceivable that broadcasters who apply multiplexing will simply cannibalize their single signal, achieving no additional revenues or perhaps merely stabilizing current market share. We recognize these facts. We also accept the principle that there should be some additional benefit to the public if its grant to broadcasters of the valuable digital television spectrum results in enhanced economic benefits for broadcasters.
We recommend the following: Once digital television reaches a significant level of penetration as stipulated by the FCC, begin a 2-year moratorium during which digital broadcasters can experiment and explore multiplexing options in the marketplace without any undue hindrance. Small-market broadcasters should be given an opportunity to appeal to the FCC for additional time if they lack the resources for experimentation with multiple channels. Thereafter, if a broadcaster elects to multicast, and in doing so reaps the benefits noted above, Congress or the FCC should apply a menu of options to that multicaster. The menu would start with a fee payment, either contingent upon the extra channels reaching a particular revenue goal or on some other formula judged fair and appropriate by the FCC.
In lieu of the fee, broadcasters could turn to alternatives. They could dedicate one of their multicasted channels to noncommercial public interest purposes, which would have to include a commitment to provide robust programming and access for local voices, or lease one such channel at below market rates to an unaffiliated programmer who is local and has no financial or other interest in a broadcast station. They could provide in-kind contributions, such as free commercial time to political parties, or studio time and technical assistance to community groups producing PSAs or public interest programming, equal in market value to the assessed fee. Whatever requirements are assessed must be attentive to the risk that they might have unintended harmful consequences, such as discouraging multiplexing at all. And such requirements should be sensitive to the opportunities multiplexing can offer for underserved constituencies to speak in their own voices, and for enhanced minority participation in broadcasting, including opportunities in management and ownership. The FCC should make clear that if a broadcaster uses its extra capacity for public interest purposes like an all-news channel or children’s educational channel, it would not incur extra obligations.
If a multiplexing broadcaster chooses either to (1) pay a fee in lieu of its additional public interest obligations; (2) dedicate a multicast channel for noncommercial public interest purposes; or (3) lease a multicast channel to an unaffiliated local programmer who has no financial or other interest in a broadcast station, it would not have to apply other nonstatutory public interest obligations to multiplexed signals other than its “primary” channel (unless the broadcaster could demonstrate to the FCC the public interest benefit of proportionally spreading specific obligations around the multicast channels. For example, it may prove advantageous to give a broadcaster flexibility to place political messages on whatever channels attract the right demographic audience to achieve maximum benefit, in ways that will accommodate the rights of candidates under the law.) We further recommend that, like the fees to be collected for ancillary and supplemental services, the fees collected for multiplexing be used to enhance the public interest in broadcasting, by applying them to educational or children’s programming, using them as part of campaign finance reform for political airtime, or in some other fashion. In any event, these fees should not simply be used for deficit reduction or placed in the Treasury’s general revenue accounts.
Endnote
8) 47 U. S. C. § 336(e).